Concept in Definition ABC

Default in any payment

The word default belongs to the English language, where among other references it is used to indicate the default of some payment that was stipulated. And this is precisely the use that is given to the word in our language.
It has been incorporated into use colloquial from areas such as economy and the finance to refer precisely to those companies or states that enter a situation of default with respect to commitments contracted in a timely manner, that is, to put it in even simpler words, a debtor will stop paying his creditor, that is the default.

Renegotiating the debt, a way out of default

When a nation You cannot specify the maturities of your debt because you do not have cash, the default will be dictated and From that moment, you must begin to negotiate again with your creditors a new agreement to pay the earring. Meanwhile, the relevant negotiation will be developed within the framework of the Justice that it has been chosen that it should intervene in the matter if there was a default in payment. The parties must abide by everything that it proposes.

Negative consideration in the international economic situation

In the joint international economic economy, the default has a negative consideration and that is why when a nation falls into default it will be looked at with distrust by investors and the rest of the companies.

Although there are many discrepancies in this regard, reality shows us that the investments fall precipitously as well as the confidence in the country that fell into default and this obviously tends to directly resent its economy, which will end up cooling even more than it is.

Difference from bankruptcy

We must point out that default is not the same as bankruptcy, they are often confused and have nothing to do with it, they are two totally different scenarios. In default, there is an absence of liquidity to pay a debt that has expired at that time, but it does not imply that the company, individual or state does not have other important assets, whereas in bankruptcy the situation is no longer reversed and there is nothing available to face a pay.

Sale of assets, another available outlet

Meanwhile, before the default there are two possible alternatives, agreeing on new maturities and payments with the creditors, and on the other hand the sale of some or all of the assets that will allow you to recover the liquidity.